OPEC expects lower demand for its oil as US hits new milestone

OPEC expects lower demand for its crude oil as rival producers grab market share and the United States sets another output record. (AFP)
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Updated 15 January 2020

OPEC expects lower demand for its oil as US hits new milestone

  • The US will see total liquids output exceed a 20 million barrel per day milestone for the first time

LONDON: OPEC expects lower demand for its crude oil in 2020 even as global demand rises, it said on Wednesday, as rival producers grab market share and the United States looks set for another output record.

The United States, which has seen its output soar in recent years powered by shale, will see total liquids output exceed a 20 million barrel per day (bpd) milestone for the first time, the Organization of the Petroleum Exporting Countries forecast in its market report.

US liquids output will reach 20.21 million bpd in the fourth quarter of 2020 — almost meeting US demand of 21.34 million bpd, OPEC said.

It lowered its 2020 demand forecast for OPEC crude by 0.1 million barrels per day to 29.5 million.

That would be around 1.2 million bpd lower than in the whole of 2019 and in line with December production, when OPEC’s share of global output fell 0.1 percentage point month on month to 29.4 percent.

This year, it said OPEC’s market share is set to fall further as output booms in non-OPEC rivals including the United States, Brazil, Canada, Australia, Norway and Guyana while global demand is rising.

OPEC said it had raised its overall 2020 oil demand growth outlook by 0.14 million bpd to 1.22 million bpd from the previous month, reflecting an improved economic outlook and booming demand in India and China. If that growth materializes it would be 30% stronger than in 2019.

It raised its forecast for non-OPEC oil supply growth in 2020 by 0.18 million bpd to 2.35 million bpd, up from 1.86 million bpd in 2019.

“The continued accommodative monetary policies, coupled with an improvement in financial markets, could provide further support to ongoing increases in non-OPEC supply,” OPEC said.

OPEC and some non-OPEC allies such as Russia have been curbing production to prevent an oil glut and support oil prices above $60 per barrel. Their current deal expires in March.

“The collaboration between OPEC and non-OPEC producing countries remains essential in maintaining stability in the oil market,” OPEC said.


Dubai rents may be bottoming out as ‘green shoots’ appear

Updated 20 January 2020

Dubai rents may be bottoming out as ‘green shoots’ appear

  • An estimated 45,000 homes were completed in Dubai in 2019 according to Chesterton estimates

LONDON: Confidence may be returning to Dubai property despite a bloated market for off-plan homes, according to a report from Chestertons, the real estate broker.

Although apartment and villa sales prices were down 2 percent and 3 percent respectively in the fourth quarter of 2019 compared to the previous quarter, rental rates are stabilizing.

But supply issues continue to represent the biggest challenge facing the market, with 45,000 new units completed in 2019 and that expected to double this year.

“The Dubai residential market in Q4 2019 is alluding to a more positive outlook for 2020 thanks to the slowdown of sales price declines and the leveling of rental rates,” said Chris Hobden, of Chestertons MENA. “This does, however, have to be tempered by the volume of new units scheduled for delivery in 2020, which makes the short-term recovery of prices in the emirate unlikely.”

In the rental market, no movement was witnessed in the fourth quarter with the market supported by a draft law which would fix rental rates for three years upon the signing of a contract. 

“To ensure high occupancy in 2020, landlords will have to be realistic in the face of tough market conditions. The incentives previously offered to tenants, such as rent-free periods, multiple cheques and short-term leases, will continue, with an increase in tenant demand for monthly direct debit payments also likely” added Hobden.